[BSC Vietnam] Black Key Make Music Too (FPT, HAH) 24.07.2017 (DELAY)

Jul. 25, 2017 5:30 AM ET|Includes: Vietnam Holdings, Ltd. (VNMHF)

Summary

  • Stock market corrections are an inevitable part of investing and please keep in mind that black key make music too.
  • FPT (VND 46,500 +0.6%, market cap VND 24,689.69bn). We maintain our Buy recommendation in medium and long term with FPT, a target price of VND 54,342 per share.
  • HAH (VND 23,000 per share/+0%/ market cap USD 35 mil). our analyst believe that HAH might deserve to be traded at P/E of 8.56, so our target price is 30,640
  • Q2 updated. Until July 21st, 383/719 companies (53%) posted their Q2 results with 91% of them made profit. The total EAT reached VND 10,800 billion, up 10% over the same period and 12% compare to Q1.
  • Investment topics related to “divesting or FOL stocks” are NTP, BMP, DIG, SAB, PVI, DHG, and DMC… From what happened to pharmaceutical industry, we should not underestimate the demand from foreign investors in attractive sectors when the foreign ownership room was loosened.

Dear Value clients and partners,

·         Black key make music too. Stocks edged lower in range-bound trading, as the financial (0.53%) and IT sectors (0.55%) helped lift the index again the drop of Industry (-1.26%) Healthcare (-0.89%) and real estate (-0.58%). Most other sectors end in the flat line with narrow change as foreign investors net brought in USD 8.47 mil. When it comes to money and investing, we’re not always as rational as we think we are. Even when the market has been up for 6 months, people are still upset for one month down. Stock market corrections are an inevitable part of investing and please keep in mind that black key make music too.

Today’s Markets:

·         Indexes, VN-Index -0.28%, Hnx-Index -1.05%, Upcom -0.72%

·         Active: HOSE: FLC, OGC, ITA, HQC, HHS.   HNX: SHB, KLF, PVX, DCS, KSK.

·         Foreigner, Buy: SAB, PLX, DHG, VCI, GAS. Sell: SSI, HSG, STB, CII, CTG.

·         Notice stocks: ROS, VNM, FLC, NVL, SHB, KLF, TV3

·         Trading volume: ~ 219.9 million shares

·         Trading value: VND3536.06 ~ 157.66 USD mil

·         Foreigner transaction Net: 8.47 mil USD Sell 14.40 USD million and Buy 22.87 USD million

Corporate update:

 

·         FPT (VND 46,500 +0.6%, market cap VND 24,689.69bn). We maintain our Buy recommendation in medium and long term with FPT, a target price of VND 54,342 per share. On July 24 2017, FPT was trading at VND 46,500, PE FW = 11.55x. FPT has announced 6M2017 results with Rev of VND20,136bn (+13% yoy), PBT of VND1,427bn (+13%yoy), PAT attributed to parent company’s shareholders of VND925bn (+13%yoy) and EPS 6M2017 = VND1,747 (+12%yoy). Generally for the first six months of 2017, FPT’s business sectors saw impressive growth except for Distribution segment with PBT growth rate of -18%yoy.

 

However, if compared to the second half of 2016, this segment is improving relatively, due to Lumia stock has been sold off gradually since May – June 2016, therefore average monthly PBT of the 2H2016 period was VND 17 billion/month. Average monthly PBT in 1H2017 was VND 24.94 billion, showing improvement on both mom and qoq basis as compared to 2H2016

·         HAH (VND 23,000 per share/+0%/ market cap USD 35 mil). in 2017, we forecast that HAH might record revenue of VND 520 bil (+6%yoy), NPAT VND 130 bil (-3%yoy) EPS 2017 reaches 3,578 dong/share, translating to P/E fw of about 6.4x. In the recent time, concerning about negative effects of Bach Dang Bridge, HAH share price has been downgrading to low level. In our opinion, HAH is undervalued. After a visit to HAH last week, our analyst believe that HAH might deserve to be traded at P/E of 8.56, so our target price is 30,640 dong/share.

HAH is a small port operator in Hai Phong area with capacity of about 250,000 TEU/year equipped with 3 Tukan cranes. In 1H2017, HAH recorded NPAT of about VND 70 bil, in which 50 bil from port operation and 20 bil from marine transportation.

–          Regarding Port operation. As at 30th June 2017, volume has reached 180,000 TEUs, slightly decrease over 2016 in which about 55-60% was the import-export cargo. HAH serves 7 customers namely Haian Park, Haian Song, Haian Times, RCL (2calls), Gemandept feeder, SML, PEL. In 2017, we expect that volume throughout might reach 320,000 TEU, with the handling price light decrease about 10% compared with 2016.

–          Marine transportation. In April 2017, HAH had invested about USD 5 mil in a fleet with capacity of 1,200 TEU. Another one with capacity of 1,600 TEUs is on the way to Vietnam from Brazil, total investment is USD 6.5 mil. Hence Total capacity of HAH’s fleet reaches about 6,000 Teu in 2017, almost doubled compared with 2016. In addition, HAH is on negotiation to corporate with a Singaporean firm to open 1 route connecting HCM- Singapore, HAH will have 1 fleet operating in this route. With the new fleets, we expect that in 2017, volume transported might reach 180,000 TEUs (+27%yoy), but price might drop even stronger of about 40% compared to 2016.

Comments:                                                         

·         Q2 updated. Until July 21st383/719 companies (53%) posted their Q2 results with 91% of them made profit. The total EAT reached VND 10,800 billion, up 10% over the same period and 12% compare to Q1. The highest bottom line stocks are currently belong to VCB, PPC, VCS, KDC, NLG while the biggest losers are DBC, HAX. The market will waiting for official number from top Blue chips such as BID, CTG, MWG, PLX, GAS, PVD, PVS… With Q2 results will be announced in 2-3 weeks’ time, the market is likely to be more diversified.

·         Investment topics related to “divesting or FOL stocks” are NTP, BMP, DIG, SAB, PVI, DHG, and DMC… From what happened to pharmaceutical industry, we should not underestimate the demand from foreign investors in attractive sectors when the foreign ownership room was loosened. BMP the top player in plastic is likely to be the next blue-chip whose foreigner room to be lift up. The company just received the document from Ministry of Industry and trade to confirm the expiration of foreign limitation in BMP’s industry. The stocks have performed poorly (in an over reacted way) due to profit margin squeezed and increasing completion from HSG.

Cheers

Long Tran

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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